Access to Modern Markets Profitable market access by small family farmers is challenged by a multidimensional set of factors. Te participation of smallholders in modern market channels has a positive effect on their income, but participation is determined by a mix of non-land assets, with varied results on the role of farm size in determining participation. Tese non-land assets include rural infrastructure (such as road access and irrigation), membership in cooperatives, education, modern market participation of nearby farms, and rural nonfarm employment.30 Lack of information (regarding price, supply and demand, and quality standards) leads smallholder farmers to face higher prices from opportunistic middlemen and traders as well as lower market participation.31 Amid rapid eco- nomic growth, urbanization, and globalization, food supply channels are becoming longer geographically but shorter in terms of participants.32
SMALL FAMILY FARMERS NEED TO MOVE UP OR MOVE OUT
As stakeholders continue to deliberate on action plans for supporting sustainable small family farms, it is important to recognize that there is no “one size fits all” policy. Te appropriate development pathway and livelihood strategies for each small family farm should reflect its particular characteristics and the level of transformation within the country’s econ- omy (see Infographic on next page). Public policy should support small family farms in either moving up to commercially oriented and profitable farming systems or moving out of agriculture to seek nonfarm employment opportunities. In agriculture-based economies, it is important
to focus on advancing policies that move up small family farmers who have the potential to become profitable by increasing their productivity. In both transforming and transformed economies, it is equally imperative to help such family farmers move up by promoting high-value agriculture and improv- ing links to urban and global markets. For small family farmers that are already profitable, policies that help scale up commercial activities are essential. Small family farms without profit potential, however, will require humanitarian assistance in the short run
and viable exit strategies out of agriculture to engage in urban and nonfarm economic activities in the long run. To move small family farms with profit poten-
tial toward greater prosperity while at the same time improving global food security and nutrition and health outcomes, a number of steps must be taken, as outlined below.
Promote Land Rights and Efficient Land Markets Institutional reforms are needed to facilitate the efficient transfer of land through the certification of land rights and through well-functioning and transparent land-rental and sales markets. Liſting restrictions on minimum or maximum landowner- ship or land-rental markets and securing property rights improves agricultural productivity. It does so by encouraging the transfer of land from small and poor farmers who have less ability or willingness to undertake agricultural activities (but who stay in agriculture due to fear of unfair compensation for land transfers) to more efficient (but oſten still poor) producers with more interest and resources.33
Enhance Risk-Management, Mitigation, and Adaptation Strategies Small family farms urgently need beter access to risk-management tools and strategies to increase their resilience to a spectrum of shocks, including weather and price shocks. Tools such as index-based insurance can help farmers take productivity-en- hancing risks, although their commercial viabil- ity for a smallholder clientele is still being studied. In the face of volatile crop prices, collaboration is needed among the private sector, governments, and donors to design innovative and flexible mar- ket-based price stabilization tools—such as hedging in futures markets—that are suitable for small fam- ily farms.34 In terms of climate-induced shocks, a pro-poor
climate change policy that creates value for small family farms and integrates them into global carbon markets is essential, although a viable modality has not yet been developed.35 Investments in triple-win agricultural practices and technologies can be effec- tive in raising smallholder productivity alongside cli- mate-change mitigation and adaptation strategies.36
THE BUSINESS IMPERATIVE 29
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